Russia’s finance ministry has proposed a 6% cut to the defence budget, phased over the next three years. This is unlikely in any case to be fully applied, but nonetheless says something about the economic squeeze on Vladimir Putin’s ambitions. The implications are serious not just for Russia’s military, but also its defence industries.
This year’s defence budget was scaled back by 5%, but only relative to planned increases, and it still ended up larger than 2014’s. This proposal, though, goes much further in envisaging an absolute reduction.
The original plan was to spend RUB3.157tn ($48.7bn) this year, but if the finance ministry’s proposals are accepted, then 2017 will see savings of RUB190bn ($2.9bn). It may well be that in the end the cuts are less deep, but it is unlikely that the ministry would not have floated the idea had not it been approved in outline at least by Putin.
An army restored, and over-hyped
The military has enjoyed years of steadily growing budgets under Putin. His belief that a powerful army is not just a necessary guarantor of national security and sovereignty, but also a symbol of resurgence and an instrument of foreign policy have kept the money flowing.
There have been very real improvements. The proportion of volunteer kontraktniki is now up to around half the total strength of the army, the Crimean and Syrian operations demonstrated that Russia has the capability to deploy forces effectively and even at range, while weapon systems such as the S-400 anti-aircraft missile are world-beaters.
Nonetheless, there is the risk of over-stating the case. After all, it is worth remembering that Nato has collectively outspent Russia on defence more than ten-fold since 1991. Operations in Ukraine and Syria have been carried out by the best of Russia’s forces, professionals rather than conscripts, and in near-ideal circumstances.
Broadly speaking, about a third of Russia’s forces have been modernised to something approaching European Nato standards, but in part precisely by cannibalising the rest. Furthermore, there are still serious shortfalls, from sufficient stocks of smart weapons to the training of conscripts serving just a 12-month tour.
This is a military that can certainly bully Russia’s smaller neighbours, from Georgia to Ukraine. It can also rattle a fearsome sabre along Nato’s fringes. But ultimately it cannot pose a serious long-term threat to Nato – which, after all, can also respond in a whole variety of asymmetric means, from shattering the Russian economy and strangling many of its trade routes – let along China.
Instead, it is part genuine military force, part political instrument. It cannot win the war in Syria, but by being there it preserves Assad and above all ensures that Moscow is a part of any discussions over the future of the Middle East and thus is seen as a serious global player. Meanwhile, from Tbilisi to Astana, governments in Russia’s shadow know that the military is the last argument of tsars, an implicit but no less formidable instrument of regional hegemony in the absence of serious economic leverage or affection.
An army beyond Russia’s means
This has cost Russia dearly, though, especially given the inevitable waste and corruption, estimated at fully 20% of the total spend by the Main Military Procuracy. It remains to be seen how well it will weather the cuts.
Any cuts will disproportionately hit the rearmament programme, given the inelasticity in the defence budget. Unless truly radical changes are being envisaged – and there are no indications that there are – Russia will seek to retain its armed forces at an establishment strength of around 750,000. It may not be able to increase the proportion of professionals, but it will certainly seek to maintain the current half-and-half mix. Salaries, upkeep and similar costs cannot be meaningfully reduced without, for example, making it even harder to retain volunteers.
Likewise, there is no prospect of an imminent end to the war in Ukraine’s east, nor the commitment to Syria. Such operations will continue to be a drain on the defence budget, but the Kremlin’s geopolitical strategy – and imperial self-image – rules out any disengagement on terms other than its own.
The areas where cuts are likely to fall are training, maintenance and procurement. The Russian army has been training hard, mounting more, larger and increasingly complex exercises, appreciating that these are crucial in creating real operational capacity. We may see fewer such operations, or more “command post exercises” instead of real ones where fuel is burned and ammunition expended, and this will have its impact on readiness and effectiveness.
Likewise, maintenance – perennially a Russian Achilles’ heel – may suffer, which will exacerbate an existing problem as older systems fail, sometimes catastrophically. The intensive use of long-range Tu-95 bombers to buzz Nato airspace, for example, has overstressed the airframes of these planes, whose designs date back to the 1950s, leading to several crashes and many more aircraft being taken off the flight line.
An army with fewer toys
But the administratively, if not politically easiest area for cuts is procurement. Already, even while trumpeting its economies elsewhere, the government has been shaving its ambitious purchasing plans, with numbers of units to be bought reduced and timeframes expended. For example, the completion of the Yasen nuclear submarine project moved from 2020 to 2023 and the initial order of the (extremely expensive) Sukhoi T-50 fifth-generation fighter aircraft has been reduced from 55 to 12.
There are already signals that more and deeper cuts are on the cards. On September 9, Putin held a meeting to discuss the new state armaments programme for 2018-25, already postponed from January. As with so many difficult decisions, this too is being held back until after the Duma elections on September 18. A draft is to be developed by the end of the year, to be submitted by July 1, 2017.
Military sources have already begun suggesting that this is because it will include cuts which may well adversely affect major defence industries whose workers have typically been stalwarts of the pro-Kremlin party United Russia.
For example, Uralvagonzavod, whose workers offered to come to Moscow to rough up protesters in 2011, has already been told it will not be able to produce the promised 2300 T-14 Armata tanks for 2020. It may face a formal reduction of the planned buy to perhaps 300 tanks. Uralvagonzavod’s railcar construction arm is already in trouble, facing strikes and layoffs, and there is a serious concern about the potential effects on its tank-building side.
Dmitri Rogozin, deputy prime minister responsible for the defence industrial sector, is reportedly fighting a rear-guard action against the cuts, but at best he is likely to be able to make the case – especially with the 2018 presidential elections still ahead – to reduce the blow on politically-sensitive industries.
The MiG aircraft manufacturer, for example, will almost certainly receive continued orders for MiG-35 fighters, not so much because of the admitted quality of the aircraft but because the corporation desperately needs the business.
Nonetheless, despite every effort economic realities are beginning to hit Russia’s military, arguably Putin’s most reliable and effective geopolitical asset.
Mark Galeotti is a senior research fellow at the Institute of International Relations Prague, a visiting fellow with the European Council on Foreign Relations, and the director of Mayak Intelligence. He blogs at In Moscow’s Shadows and tweets as @MarkGaleotti.